Conventional Loan Limits For 2023 Increases To $726,200
In this blog, we will discuss and cover the new updated 2023 conventional loan limits increasing from $647,200 to $726,200 in traditional counties in the United States. 2023 conventional loan limits have increased from $970,800 to $1,083,300 in single-family homes in high-cost areas.
The U.S. economy is booming. Historical records are being broken as days, weeks, and months pass. Unemployment numbers hit 3.5%, which is at a 50-year low. The Dow Jones Industrial Average is hitting new highs every day. Lowest unemployment numbers for African Americans, Asians, Hispanic Americans, and women in the history of the United States. Lowest mortgage rates since the 2008 Great Recession.
Highest homeownership ever recorded in history. The housing market has never been so strong in the history of the United States. Demand for housing has never been this strong. There is more demand for homes than inventory. Homebuilders are reporting record sales and revenues. Homebuilders are selling homes before they get final permits and plans approved. A higher home price comes with a strong housing market with more demand versus inventory.
Conventional Loan Limits Increases For Eight Years in a Row Due to Skyrocketing Home Prices
The Federal Housing Finance Agency (FHFA) has announced the eighth increase in Conventional Loan Limit to $726,200 from 2022’s conventional loan limit of $647,200. This is the eighth year the FHFA has been increasing conventional loan limits due to the hot housing market.
The Federal Housing Finance Agency is the main source of house price indexes. It is our nation’s only free public data source for Home Price Index data across all 50 states. They’ve been gathering this information since the mid-1970s.
The home price indexes are built from tens of millions of home sales. This article will discuss the breaking news on 2023 conventional loan limits increasing from $647,200 to $726,200. This is the eighth year the Federal Housing Finance Agency has increased conforming loan limits.
Breaking News Of FHFA Increasing Conforming Loan Limits To $726,200
Breaking news of the FHFA increasing the 2023 Conforming loan limit from $647,200 to $726,200 due to rising home prices have made homebuyers able to afford a home.
Conventional loan limits increase due to skyrocketing home prices. Similar to years prior, the Federal Housing Finance Agency (FHFA) has announced that the maximum conforming loan limit will once again be raised for 2023.
Many homebuyers have been nearing being priced out of the housing market due to rising home prices.
Conforming Loan Limits have been Increasing for Eight Years in a Row
This marks six years in a row that the Federal Housing Finance Agency increased conventional loan limits. However, the 2023 Conforming loan limit increase is not effective until January 1st, 2023.
A number of states (including Alaska and Hawaii), Guam, Puerto Rico, and the U.S. Virgin Islands do not have any high-cost areas for 2023.
Gustan Cho Associates accepts the 2023 Conforming Loan limits effective immediately, even before January 1st, 2023. Borrowers do not have to wait until January 1st, 2023, to take advantage of the 2023 Conventional loan limits increase from $647,200 to $726,200. The conventional loan limit increase also applies to high-balance loans in high-cost areas.
2023 Conventional Loan Limits Versus FHA And VA Loans
In general, HUD, the parent of FHA, follows the loan limit increase on conventional loans. HUD has announced FHA loan limits for 2022 have been increased to $420,680. The 2022 HUD loan limit increase on FHA loans was the sixth year in a row HUD has increased FHA loan limits on FHA loans due to skyrocketing home prices. HUD increased FHA loan limits for the seventh year in a row to $472,030 in common areas and $1,083,300 in high-cost counties.
HUD, the parent of FHA, announced the new loan limit on FHA loans for 2022, increasing it to $420,680 in most counties in the United States on single-family homes. FHA loan limit in high-cost areas will increase to $970,800. FHA loan limits for 2023 in common areas is $472,030 and is $1,083,300 in high-cost areas.
For the past seven years, HUD was right behind FHFA when announcing the FHA loan limit increase. The VA no longer has a maximum loan limit cap. Former President Donald Trump signed a bill eliminating maximum VA Loan Limit Caps on VA loans in 2020 while he was the 45th President of the United States.
High-Balance Conventional Loan Limits Increase to $1,083,300 from $970,800 For 2023
The increase is set for conforming loans acquired by FANNIE MAE and FREDDIE MAC to be raised to $726,200 from $647,200 in median-priced areas. In high-cost areas, the conventional loan limits increase to $1,083,300 from last year’s $970,800..
Fannie Mae and Freddie Mac’s updated loan limit increase will take effect on January 1st, 2023. However, some lenders like Gustan Cho Associates will honor the 2023 Conforming loan limits increase effective immediately before the January 1st, 2023, effective date.
This blog details what the loan amount change means for you and why the loan amounts were raised. This article will cover and discuss the Conventional Loan Limits increase from $647,200 to $726,200.
Conventional Loan Limits Increase To $726,200 From $647,200 Due To Rising Home Prices
How Data From The Home Price Index Influence Conventional Loan Limits. The home price index offers insights into housing in future home price models. FHFA Supervisory Economist William Doerner states, “House prices have risen every quarter for the last seven years.” He states that we are still in an upward trend of home prices; however, the price gains are starting to slow down their upward pace. The reason for conventional loan limits increase to $726,200 is due to skyrocketing home prices nationwide:
House prices rose across all 50 states and the District of Columbia between quarter 3 of 2018 and quarter 3 of 2022. Raising the conforming loan limits is important for keeping homebuyers in the mortgage market, with home prices rising nationwide.
The top five states where the house price index rose were Idaho (11.6%), Maine (7.9%), Arizona (7.9%), Utah (7.8%), and Indiana (7.4%). States showing the smallest appreciation were Illinois (1.9%), Connecticut (2.2%), Maryland (2.4%), South Dakota (2.7%), and Iowa (3.2%). According to the Federal Housing Finance Agency, home prices in the United States rose in the third quarter of 2022 by 1.1% (Measured by House Price Index (HPI). 1.1% may not sound like a lot, but that is a significant jump for just a few months. Comparing the past 12 months, home prices rose a staggering 4.9%. That is calculated from quarter 3 of 2021 through quarter 3 of 2022.
Data of Upcoming Conventional Loan Limits
Certain cities in our nation, such as Boise, Idaho, saw home price values Rise by 11.1%! In other areas, such as Camden, New Jersey, we only increased by 0.7%. It is the job of the Federal Housing Finance Agency to weigh the ups and downs of the nation’s housing market to change loan limits accordingly.
TOP 20 and BOTTOM 20 HPI’s NATIONWIDE
If this data seems overwhelming, we will explain what this loan amount increase means for you. Freddie Mac and Fannie Mae set conforming mortgage guidelines. These two government-sponsored enterprises regulate the conventional mortgage market.
Current indications show Freddie Mac and Fannie Mae will again be privatized, which should expand mortgage lending programs. But for now, we must conform to their guideline standards.
How The FHFA Adjusts Baseline Conventional Loan Limits Each Year
The Federal Housing Finance Agency is mandated by the Housing and Economic Recovery Act (HERA) to adjust the baseline conforming loan limit each year to reflect changes in average home prices. On November 25th, 2021, FHFA published the third-quarter data showing the average increase in U.S. home price values. According to their data, house prices increased by 8.38% on average. The maximum conventional loan limits for 2023 will increase by a similar percentage and are now capped at $726,200.
High-Balance Conventional Loan Limits In High-Cost Areas
High-Cost Area Limits:
- In many parts of our nation, the local median home value exceeds $726,200
- These counties are considered HIGH-COST AREAS
- To be considered a high-cost area, the median home value must exceed the local median home value by 115% or more
- Counties Across the Nation have higher loan limits
- HERA establishes a maximum loan limit for all areas of the country called a ceiling
High-Balance Conventional Loan Limits in High-Priced Areas
The ceiling is 150% of the Baseline loan limit. $726,200 * 150% = $1,083,300. These calculations are for ONE-UNIT properties. For a list by county and for two to four-unit dwelling loan limits.
A loan amount above the conforming loan limit falls into the JUMBO MORTGAGE category. Jumbo mortgages are amazing loan programs but are harder to qualify for. Many times, a jumbo mortgage will require significant cash reserves after closing.
Contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response for more information about the effective date. Or email us at gcho@gustancho.com.
Benefits Of 2023 Conventional Loan Limits Increases on Conforming High-Balance Loans
What do the Conventional loan limits increase to $726,200 from $647,200 mean for conforming borrowers? The increased loan limits for 2023 will help thousands of Americans utilize a conforming mortgage to buy their property.
Jumbo loan products can require up to 18 months of cash reserves to qualify. When purchasing an $800,000 home, that amount can add up quickly. The increased loan limit will help potential home buyers buy a home within the Fannie Mae and Freddie Mac lending guidelines.
The increased loan limits also apply to mortgage refinance. In 2023 you may refinance your home based on the increased loan limits. For example, you may be able to cash out more if you complete your cash-out refinance transaction in the calendar year 2023. Please see our article for more information on CONVENTIONAL CASH-OUT MORTGAGES.
Should I Worry About Housing Market Correcting Due To Increasing Conventional Loan Limits: Fear of Housing Market Correction
While some experts argue the price of homes is increasing at an alarming rate, dooming us to another housing bubble, many other experts feel real estate is growing proportionally with the rest of the economy.
The Federal Housing Finance Agency has shown us pockets of the country that are growing quickly and others that are almost stagnant. We suggest reading into this data if you and your family want to relocate.
The team at Gustan Cho Associates is available seven days a week for any mortgage-related questions. We offer FHA, Conventional, and VA mortgages without any LENDER OVERLAYS. Please contact us at Gustan Cho Associates at 262-627-1965. Text us for a faster response—or email gcho@gustancho.com to schedule a one-on-one mortgage consultation today.
